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Where Taxpayers and Advisers Meet

EIS and trusts

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am
EIS and trusts

Postby Feedback » Tue Feb 06, 2018 12:16 pm

Trusts can claim ER if the beneficiary of the IIP works in the qualifying company and the trusts hold the requisite amount of shares. What happens if the trust has more than one beneficiary - is the ER relief pro rated or can it be claimed in full (assuming not all beneficiaries work in the company).

As an example, Mr A transfers 20 shares (company has 100 shares in total) into trust for himself and his 2 children. Mr A continues to work in the company. The trust sells the shares at a gain. Is the whole gain subject to ER.

are there any links to the relevant HMRC manuals?

Thanks in advance

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: EIS and trusts

Postby Feedback » Tue Feb 06, 2018 12:16 pm

my bad - headers should be entrepreneurs relief and trusts

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: EIS and trusts

Postby AGoodman » Wed Feb 07, 2018 12:06 pm

It turns on interests in possession. If A has an interest in possession in the entire trust fund, it could still qualify.

If he had an IIP in an undivided third, I believe it would be proportionate.

An overriding power of appointment in favour of the children would be fine provided A had the IIP at the time of the disposal.

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: EIS and trusts

Postby Feedback » Thu Feb 08, 2018 6:17 pm

Thank you


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